What if a company would promise you that with a few drops of blood test they could detect conditions such as cancer and diabetes quickly without the hassle of needles?
Well, that's exactly what Theranos did to fool its customers. Theranos, a consumer healthcare technology startup, was once valued at $10billion, and its founder claimed it would revolutionize the blood-testing industry.
On June 15, 2018, the founder of Theranos Elizabeth Holmes & Balwani were charged with massive wire fraud.
Theranos; A consumer healthcare technology startup was once valued at $10billion.In 2014, Theranos a blood-testing startup was flying high at that time. When existing technology required one flacon of blood for each test conducted, Theranos claimed that they will be able to perform hundreds and hundreds of tests ranging from diabetes to complex genetic analysis with just a single drop of blood. They claimed it would be fast and expensive. It raised a lot of funds. They roughly raised $724 million of capital from different investors around the world. Elizabeth Holmes, the founder of Theranos, had dropped out of Stanford to found the company by using all of her tuition money; she was just 30 at that time. Theranos all of a sudden became one of the rising companies in Silicon Valley. But the technology by which they claimed that they could revolutionize the world didn't work.
But one of the award-winning journalists named John Carreyrou was suspicious of Holmes and the claim which their company made. He was more shocked and could not believe the things which the board of directors said in the meeting. John's interest was triggered further by Holmes' ability to introduce groundbreaking technology in the field of medicine after just attending a few semesters of chemical engineering at Stanford.
John met the members of the Theranos board and they started sharing their experience with the company and started presenting a whole bunch of lies. The results that were sent to the real patients were absolutely incorrect. Life-changing medical decisions were made by individuals after taking the test which was extremely terrifying and harmful. The company had been built on nothing more than lies.
Theranos whistleblowers were able to export the information to John that the company was not using its own technology to run its majority of the tests because honestly, they were incapable of doing so. Theranos at first denied all of the claims. Theranos even threatened to sue John himself and he became an enemy to the company at the end of the day.
DIFFERENCE TO THE WORLD
Holmes wanted to create a huge difference in the world. At the age of 9, she wrote a letter to her dad that she wanted to do something new and unique for the world. As a child, she hated syringes a lot. She used to faint after getting a sight of the needles. Holmes definitely had a good story ahead. Her father used to work for the government agencies contributing to a lot of relief work and she had the idea to change the world. And at the age of 19, she dropped out of Stanford University. In order to raise funding for Theranos Holmes reached out to a lot of connections from her family as well as outside.
There were a lot of rumors going around. Some claimed that the results were inaccurate and inefficient. Some claimed that the labs were not conducting any tests.
1. The SEC charged Holmes and its president named Balwani with fraud.
2. Holmes also lost control over her companies shares.
3. Theranos closed its labs and Holme's net worth dropped to zero.
The FDA released its reports after an investigation that Theranos had uncleared medical devices, poor records, and most importantly they had failed to conduct audits.
The complaint claimed that the company raised more than $700 million by frauding investors for years and years. They lied about their company's performance. Elizabeth Holmes used to attend a lot of news conferences with a lot of elite personalities like the former president Bill Clinton and more. Holmes was questioned during Clinton global initiative annual meet.
In 2018, Holmes stepped down as the CEO with her former company president Ramesh Baldwini, they were charged with criminal fraud, having made false claims and misled so many investors. After three months the company was officially shut down. Thousands of company employees became jobless and unaware of their future. The company started to shut down its labs and laid off the majority of employees.
A lot of customers received wrong reports which were life-threatening too. The technology has misdiagnosed a lot of patients. As an estimation, the technology has been used on over 176,000 people. This was absolutely unethical in every way.
In January 2022, Elizabeth Holmes was found guilty of four charges of defrauding investors, and now she faces up to 20 years in jail. Holmes actually admitted to mistakes in her company's operation but she continued to maintain and say that she never defrauded her patients or any of her investors.
WHAT CAN WE LEARN
This was definitely one of the most shocking cases in the history of US Capitalism. Silicon Valley was the place where it initially started and was also the place for THE END. This era where everyone wanted and was in a rush to showcase a female billionaire. It became a war on the gender of who can beat whom. No one cared about the betterment of anyone but they only cared about themselves at the end of the day. About their wealth, their status, their connections and a lot more.
ONE OF THE MOST DANGEROUS FORMULA
It was illegal in every aspect but at the time when these test reports were reaching its customers, no one had a clue of what was going on inside the company. It was handling all of its operations in secrecy. Where thousands and thousands of individuals' lives were in danger. From false promises to Big talks, they tried to win everyone's trust.
TOXIC WORK CULTURE
The work culture of Theranos was definitely toxic. The whistleblowers were threatened by the core members of Theranos. Those who pushed to say something were fired and removed from the company all of a sudden.
One of the sky-rising stories of the Silicon valley was initially crushed forever and it touched the ground. From being a billionaire to falling into the vast ocean of criminal charges forever.